Like generations before, Gen Z is struggling to remain optimistic about the economic future

From the outside looking in, Mitch Widmer is doing well.

After navigating college graduation and a job that fell through at the start of the COVID-19 pandemic, he is married and lives in a house built on family land. Both he and his wife are working — he as a sales rep, she as a nurse — and they are expecting their first child.

But the 27-year-old of New Prague can't shake the feeling his family's financial security is precarious.

"We're set up pretty decent now," Widmer said. "However, the way the overall economy's been and just the country in general, I feel like we're trying to fight to keep where we're at."

The U.S. economy has done well on paper in recent years. But Gen Zers, like many Americans, aren't feeling it. And like millennials before them, Gen Zers aren't sure they'll be able to afford milestones that were a given for their parents, such as buying a house, having children or retiring. Some in this generation, born between 1997 and 2012, are throwing up their hands and "doom spending" with abandon; others are simply resigning themselves to a future less bright than that of generations past.

"Ever since 2020, I just feel like it goes downhill from here," said Tashianna Allen, 25, a paraprofessional who shares a house with her mother in Brooklyn Park.

Uncertainty — and maybe a little cynicism — is often a hallmark of young adulthood, particularly when it coincides with a major global event or crisis. Baby boomers faced stagflation and the Vietnam War; millennials experienced 9/11 and graduated during the Great Recession.

This particular crop of young adults is coming of age in the shadow of a global pandemic, geopolitical strife and economic doubt as costs from housing to education to child care reach new highs. A recent U.S. News poll of Americans ages 18 to 34 found 70% ranked cost of living as their top issue heading into the November presidential election.

"I don't think this is just coming-of-age anxiety, trying to find one's way in a different economy. Look: There's been a longstanding affordability crisis in this country, and I think Gen Z is coming of age in one of the darker chapters of that affordability crisis," said Bilal Baydoun, director of policy and research at the Washington, D.C.-based Groundwork Collaborative. "It is a real risk that widespread resignation will set in, that young people's confidence about the future will be dampened."

The struggle is real

Key markers of economic wellbeing have declined across age groups after peaking in 2021, but younger people have experienced some of the biggest setbacks, according to the Federal Reserve's Survey of Household Economics and Decisionmaking.

Of adults aged 18-29, 46% reported they had three months of emergency savings in 2021. In 2023, that number was 39%, or a seven-point drop from two years prior, compared to a five-point drop among all age groups. While the decline was the same for the next-youngest age group surveyed — adults aged 30-44 — 47% of those respondents reported having emergency savings in 2023.

Beyond having money saved or cash on hand for an unexpected expense, the youngest survey respondents were less likely than other age groups to have a bank account at all. While 92% reported having a bank account in 2021, two years later, that number had dropped to 89%, compared to 94% of all adults. No other age group experienced such a steep drop-off in that period.

According to a recent Minneapolis Fed survey, Gen Z respondents were more concerned with rent and grocery expenses than those in other age groups and also perceived those prices to be rising at a higher rate, according to Regional Outreach Director Erick Garcia Luna.

St. Paul resident Jami Mistic said they've always lived paycheck to paycheck, but it's gotten harder in the last three years. The 26-year-old sometimes struggles to afford food despite working full-time and living with a roommate. Making ends meet can mean pulling money from savings, skipping a meal or drinking water to try and stay full. Going out with friends or on a date often isn't possible, and goals for the future have limits: for example, buying a house might be possible one day, but it would likely happen with friends.

"It can be very frustrating because people don't understand what it's like," Mistic said. "I've been 'middle class' my entire life, but I haven't felt that way."

Courtney Kujala, 27, of Minneapolis, works seven days a week and shares a one-bedroom apartment with a friend. The cost of living is still daunting — "I eat a lot of sandwiches," she said of her regular PB&J dinners — and there are old hospital bills she hasn't been able to pay.

When Kujala talks to people her age, she said, she hears a lot of distrust in traditional power structure and a desire to opt out of them altogether.

"I would say the American Dream is changing," she said. "A lot of people I know and a lot of people I talk to just want to check out and just move on to a plot of land and live off of it and just be as disconnected from the system as possible."

You only live once

Like any generation, Gen Z is not a monolith.

"There seems to be a lot of talk as far as what Gen Z is feeling ... but I don't know if that's really been reflective of everyone's experience," said Minneapolis resident Jack Wold, 23. "I think the biggest one is, 'Oh, Gen Z is lazy.' ... I see my friends going to work. I see them putting in a lot of time and effort."

Nearly half of Fed Survey of Consumer Finances respondents under age 35 reported holding a retirement account in 2022, the highest percentage since 1989, the first year for which survey data is available.

Haley Chinander, an analyst and writer at the Minneapolis Fed as well as a Gen Zer, said growing up in the shadow of the Great Recession and entering the job market during the pandemic instilled a sense of caution in her peers, even if the turmoil of the COVID years encouraged them to spend on experiences and live in the moment while they can.

"All of that culminates in a lot of anxiety and pressure to save that might not have been there for prior generations," she said. "Obviously, different generations have faced their own tumultuous time periods, but I think these times that are lining up at these really formative moments in our lives are creating that sense of, 'I should prepare.'"

Though they might not feel it now, Gen Zers have plenty of runway before their future is set, said Kevin Mahoney, founder and CEO of Washington, D.C.-based Illumint, which provides financial planning to millennials. Among members of that generation, some now hold more wealth than their parents did at the same age — as do some Gen Zers.

"You're still young," Mahoney said of Gen Z, "and there's a lot of time remaining for circumstances to change."